Centuria Capital Group

Thank you for standing by and welcome to the Centuria Capital Group HY26 results. All participants are in listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Mr. John McBain, Centuria Capital Group's Joint CEO. Please go ahead.

Good morning, everyone. Thank you for joining us. I'm John McBain, Joint Chief Executive. With me today is my fellow Joint CEO, Jason Hulich, and our Chief Financial Officer, Simon Holt. Also, Tim Mitchell and Peter Ho from our Investor Relations and Corporate Strategy team. Today we'll cover group performance for the half, divisional execution, our financial position, and our strategy and outlook. The group delivered repeatable earnings growth for the half. underpinned by both contracted and recurring revenue streams and conservative balance sheet settings. Execution during the half has improved forward earnings visibility, supporting our decision to upgrade FY26 operating earnings guidance to 13.6 cents for security. I'll begin with an overview of the group's performance and our through cycle approach to growth. Jason will cover divisional performance across property funds management investment, real estate finance and data centres. Simon will cover the financial results before I comment on strategy and outlook. The outcomes for the half are summarised on slide 4. Group assets under management increased by 6% to $21.8 billion, supported by strong contributions across property funds management and real estate finance. Across the property platform, we executed approximately $500 million of real estate acquisitions during the half and are on track to exceed our $1 billion full-year target. We also completed the acquisition of the Arrow Funds Management Platform, adding $440 million of agriculture AUM and further strengthening our private investor and family office networks. This execution and improved earnings visibility underpins our decision to upgrade FY26 earnings to 13.6 cents, representing an 11.5% uplift on FY25. This upgrade reflects underlying run rate momentum rather than one-off items. Moving to the platform overview on slide five, which highlights the scale and diversification of Centuria today, and what matters for earnings quality and capital allocation. Virtually all verticals now exceed $1 billion in assets under management, supporting operating leverage while preserving flexibility in how and where we deploy capital. We operate across listed and unlisted vehicles, real estate and credit, and span most major property sectors across Australia and New Zealand. Diversification is not just about earnings volatility reduction. It allows us to allocate capital based on risk-adjusted returns and investor demand rather than being forced to pursue growth in any single product, sector or market. In the current volatile environment, that flexibility is vital. As the platform continues to scale, we see opportunities for margin expansion over time without reliance on any single product, sector or capital source. Slide 6 demonstrates how diversification has supported earnings and AUM resilience through the sharpest rate-hiking cycle in decades, with Group AUM achieving a new record in this half. While performance fees can introduce period-to-period volatility, the underlying base of management fees, property income and credit earnings continue to grow. This reinforces our conviction that the platform is designed to perform through the cycle, not just in support of market conditions. Turning briefly to the broader environment on slide 7. Despite higher rates, Centuria Platform's weighted average cap rate and product returns remain significantly above term deposit rates, and we continue to capture opportunities across real estate and transaction markets, many of which are showing signs of constrained supply and improving rental growth. Structural capital flows also remain supportive. These include ongoing superannuation inflows, continued SMSF growth and approximately $30 billion of capital expected to be repatriated from exploring bank hybrids over the coming years. Going to slide 8. Private credit remains a strategic priority for Centuria and a good example of disciplined growth in a structurally expanded segment. We have been active in real estate credit since 2016. partnered with Bass Credit in 2018 and following a strong track record we acquired a 50% interest in 2021 with the platform growing at a compound rate of approximately 36% per annum since that time. We increased our stake to 80% in 2024 and this morning as previously forecast we announced we have exercised our option to increase our interest to 100%. During the half, this business executed approximately $1.4 billion of total loan origination, restructuring and exit activity. Market share remains modest at around 1%, highlighting significant runway for the group within a large and growing market. Importantly, The previously announced succession and integration plan for Centuria Bass remains in place, with David Giffen and Yohuda Gottlieb being promoted from within the business to CEO and Deputy CEO respectively. We believe steps such as this support continuity and long-term sustainable growth. I'll now hand over to Jason to go through the divisional performance in more detail.

Thank you, John, and good morning, everyone. After year 26 was another consistent period of execution for the property platform as illustrated on slide 10. Property funds management AUM increased by 5% to $18.3 billion during the half. We executed approximately $700 million of real estate acquisitions and divestments, supported by strong engagement from unlisted investors, which has underpinned transaction execution as other sources of capital have tightened. Property fundamentals remained supportive, with limited Ford supply and improving rental growth across most sectors, underpinning earnings visibility. Turning to slide 11. The half was a period focused on integration and value creation. We established Australia's largest unlisted single asset industrial fund at Port Adelaide, with strong participation across our investor base and significant owner subscriptions. In agriculture, we secured Australia's largest hydroponic glasshouse by an off-market acquisition and commenced capital raising ahead of settlement. Listed lease continue to selectively recycle capital, demonstrating the ability to divest assets at premiums to book value, as well as generate strong leasing outcomes to improve the income profiles of each portfolio. Slide 12. Distribution remains one of Centuria's most important competitive advantages. Coming to the year 25 was a strong period for new investors joining the platform, including more than 460 investors and family offices acquired through the Arrow transaction. Early engagement with these investors is already translating into interest across additional Centuria products, consistent with the proven integration blueprint applied across our M&A activity. We saw a similar outcome following the Prime West merger, where five years on, strong integration and ongoing engagement has resulted in approximately 50% of Prime West investors committing to other Centuria products beyond their original investment. This behaviour reflects the strength of Centuria's unlisted real estate platform, where investors can self-diversify across multiple strategies within a single platform. Today, we have over 15,500 unlisted investors. with more than 1,600 invested in three or more Centuria funds, and almost 10% of these invested in 10 or more funds. This depth of engagement supports capital recycling as funds mature and position Centuria to consistently repatriate and redeploy private capital. We believe this distribution capability is difficult to replicate and represents a durable competitive moat for Centuria. Turning to property and development finance on slide 13. Property and development finance AU increased by approximately 9% to $2.5 billion during the half. During the half, Centura Bass Credit executed approximately $1.4 billion of loan origination, restructuring and exit activity, while also raising $200 million of gross unlisted investor inflows. The business remains well positioned for further growth beyond its current market share of around 1% of Australia's private credit market. Turning to slide 14, we can see that growth has been achieved alongside high volume origination, restructuring and loan repayment activity. This has been paired with a strong focus on managing the books composition, which remains largely exposed to residential asset-backed lending. Growth has not come from stretching average LPRs or loan structures across the overall book. Centuria Bass Credit is highly operational, hands-on business within Centuria, underpinned by deep in-house expertise. Since the JV commenced in 2021, we have made targeted investments in systems, processes and people to support scalable growth while maintaining disciplined risk management. In addition, Centuria Bass benefits from Centuria's broader platform, governance, distribution and development as required. The slide 15 highlights insurers' track record of progressively building the platform over time, primarily through organic growth selectively supplemented by inorganic opportunities. From a data centre perspective, the key takeaway is that this represents the early stages of long-term demand drivers. Slide 16. To further emphasise this evolving strategy, slide 16 highlights that data centres and sovereign AI represent long-dated strategic optionality within a market characterised by sustained demand and significant capacity constraints. Accordingly, our current focus is on progressing planning and across identified sites. As tangible milestones are achieved, we will assess the most appropriate value realisation pathways on a site-by-site basis. Reset data remains an early stage of the strategy. Since acquiring an interest in the business, we have partnered with leading global operators, successfully launched Australia's first public Solomon AI factory, and scaled internal capability following initial integration. The business is now transitioning into an early commercialization phase as customer onboarding progresses, which is expected to support improving profitability over time. Importantly, capital deployment remains return-driven, fully considers balance sheet integrity, and short-term profitability is not required to meet FY26 earnings guidance. I'll now hand over to Simon to cover the financial results.

Thanks, Jason, and good morning, everyone. Before stepping through the numbers, it's important to revisit the segment changes introduced at the full year 25 and carry through into these half year accounts. These changes were made to better align reported performance with Centure's underlying economic exposure and how the platform is managed. We restructured our operating segments and adopted a proportionate consolidation approach for co-invested property assets, providing a clearer view of underlying economics. Financing costs attributable to these investments are disclosed separately as non-recourse loans. Now turning to the result. FY26 was another period of disciplined execution. Statutory NPAT was higher, reflecting fair value movements on co-invested property assets. An operating EBITDA of 89.3 million was delivered for the half. From a quality perspective, what's important here is not just the headline result. but the mix of earnings underpinning it. The majority of operating earnings continue to be generated from recurring and contracted sources with performance fees remaining a secondary contributor rather than a dependency. This provides confidence in the sustainability of the run rate as we move through to the second half. Property funds management earnings reflected strong activity, increased transaction volumes and performance fee contributions. Investment earnings moderated as expected due to asset recycling rather than any deterioration in asset quality or returns. Real estate and development finance earnings were stable across the halves. Reset data impacted earnings and our share or Centuria's share was $2.8 million at 50%. This happened during the period and is expected to be a negative contributor to full year earnings, reflecting its current investment and early commercialisation phase. Importantly, this reflects a deliberate and disciplined approach. Capital has been deployed against long dated strategic optionality rather than short term earnings contribution. As customer onboarding progresses, we expect this impact to moderate over time. Cost settings remained contained across the platform, reflecting disciplined balance sheet management and access to lower cost of funding. As a result, operating profit after tax increased to $54.6 million, delivering operating earnings per security of $0.066, up 6.5% on the prior period. A distribution of $0.052 per security was declared. Turning to slide 19 highlights. This page highlights the quality and sustainability of funds management earnings. Property funds management is considered a core segment for the group and as such the majority of the business resources are dedicated to this segment. Centuria's focus on accelerating operating leverage from this segment forms part of the group's overall growth strategy. and we anticipate that margins will continue to expand as the platform scales through time. Recurring management fees remain the dominant contributor to this segment. Performance fees were booked where funds performed part of their respective testing thresholds adopted by the group. Centru's underlying funds also retain additional latent fees which remain unrecognised. These are expected to fluctuate in line with prevailing valuations from period to period as well as when newer vintage funds mature through the cycle. Turning to slide 20. During the half the group realised $133 million of cash through the sale and recycling of balance sheet assets and gearing remained steady. Liquidity is strong and there are no near-term debt maturities. From a capital management perspective the balance sheet is doing exactly what we want it to do, funding growth, supporting selective investment and preserving flexibility. Asset recycling continues to be a key lever allowing us to re-deploy capital without increasing balance sheet risk. Also the average cost of debt reduced during the half following the repayment of our listed notes. lowering our all-in margin from approximately 325 basis points to approximately 275 basis points. This supports self-funded growth while maintaining a conservative and flexible funding profile. Turning to slide 21 and talking about the platform, beyond the corporate balance sheet Centuria has access to $8.3 billion of diverse lending facilities across listed and unlisted funds provided by a broad group of 24 lenders. This diversity reduces reliance on a single capital source and allows us to manage funding proactively across market cycles. Average margins improved to 1.57% in the half, highlighting the benefit of stronger lender engagement and an active funding strategy. The funding profile and covenants shown reflect a conservative and flexible balance sheet position with funding cost and risk setting actively monitored across the cycles. I will now hand you back to John for strategy and outlook.

Thanks Simon. To conclude on slide 23, our focus remains on scaling core property funds management, progressing targeted acquisitions, and continues to build Centuriabas Credit. Data centre and sovereign AI initiatives will be progressed selectively and only where returns are compelling and customer demand is locked in. These initiatives provide the group with long-term strategic optionality as we go through the build-up of this business. The group balance sheet remains a strong asset and strategic asset. Our platform and deep distribution networks are unique to competitive advantages which can generate a diversified and predominantly recurring earning space. Factors such as these provide a degree of visibility into earnings underpinning the guidance upgrade and allowing Centura to build through cycle momentum while remaining nimble as markets evolve. Thank you. That concludes the form presentation. I'll now hand back to the operator. Thank you.

If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2. If you are on a speakerphone, please pick up your handset to ask your question. The first question comes from the line of Cody Shield from UBS. Please go ahead.

Good morning, John, Jason and Simon. Thanks for your time. Firstly, just on second half drivers, can you maybe talk a little bit to what you're expecting out of reset data and performance fees in the second half?

Yeah, so on the performance fees, we're expecting pretty much half on half to be about the same and consistent with what we said at the full year results back in August at around $20 million. In relation to reset data, our expectation is that we probably will still make a loss albeit smaller than this half in the second half. So obviously setting us up for future tailwinds but slight improvement.

I think there's quite a good pipeline of demand now for our capability but the timing of locking in that demand just has to be finalised and as those people slot in, then we'll get more visibility. But, you know, this is a very, very young business and we've got a measured approach to it.

Yeah, okay. Maybe if you could just provide a little bit more detail on what was causing the slip because, you know, it wasn't 26, I think, you're going to get a positive contribution from Reset Data?

It's just timing of signing up customers.

Okay, that's clear. Maybe just turning to acquisitions that are in DD or secured, can you just provide a read on maybe what type of assets are falling into that and also what level of divestments you're expecting in the second half?

Sure. Jason here. On the acquisition side, look, I just can't go into too much detail on some of them. It's still in due diligence. But it's a mix across industrial data centre, retail and office, both in Australia and New Zealand. So it's a nice mix. A nice mix of geographies and asset classes. Some of that has been secured and some is in DD, but it's nice to have a really good pipeline there. On the divestments, I think we had just under $200 million for the first six months. As I think I said at results, we'll probably end up somewhere around $500 million full year.

Okay, that's great. That's all for me. Thanks, guys.

Thank you. Your next question comes from the line of Andrew Dodd from Jefferies. Please go ahead.

Oh, good morning, guys. Just following on from Cody's question around reset data, I mean, you've called out that the lease-up is expected to sort of strengthen in the second half. But, I mean, the drag on earnings is pretty significant. Given that you've said that you sort of expect this to be a net negative contributor this year, I mean, when can we realistically expect this segment to become at least break-even?

I mean, Simon, if that's going through how significant it is, our half is $2.7 million out of a $50 million after-tax profit. Is that right? $3 or $4 percent? Yes, $2 or $3 million. Simon, I think we're, Andrew, I think we've test that comment. up to you whether you think that's significant. And yes, we'd prefer it not to be a drag, but of course, like all things, when it goes away, when these customers sign up, and they could sign up sooner than we think, we've used a very strong pipeline of significant clients, I guess that will help us not be able to have these conversations.

Right, okay. Maybe just on Centuri Bass then, are you able just to talk around the level of bad debts you're seeing across the book? And I sort of ask this just in the context of, I mean, there's been some recent press around your exposure to a troubled developer in Western Sydney and if that's having any impact on the business.

No, look, it's basically nothing at the moment. The portfolio is in very good shape. You know, we deal with a lot of different counterparties in this business. We're very comfortable with the book. You know, in particular, relationships we have with some customers, you know, we steer more towards things like residual stock, which are very liquid and a lot lower risk than, obviously, development finance. But, yeah, the book's in very, very good shape. It's probably as good as it's ever been.

All right, that's great. Thanks, guys. That's all I've got.

Thank you. The next question comes from the line of Tom Bordor from Jardine. Please go ahead.

Good morning. I'd just be interested in seeing your comfort with look for gearing and sticking up to almost 38% now and just noting that, you know, around a third of your asset base is intangibles. What level starts to cause discomfort from a gearing perspective?

I think the first comment I'd make Tom is all of that debt that sits in property investments is non-recourse so it doesn't actually flow up to the headstock and vice versa doesn't require us investing that down if there is anything challenged. So yeah, look for hearing moves around from time to time. mainly the big two investments that we have are SIP and COF on our balance sheet and COF gearing has moved out a little bit so that does have an impact for our look through gearing but I think what's important we use operating gearing as a measure and supports looking at the intangible value as an important part of our business. We buy organic assets through funds management and from time to time by inorganic transactions. So we are sitting at around that 12.5% on that operating gearing level for which it's consistent with a half year and has been consistently in that target band that we've been quoting for, I'm going to say, two to three years now, that 10% to 15%.

Yeah, Thomas, I know it's a metric that a lot of you guys look at and we understand that. But I think the other submission, I think Simon touched on it, we think the intangibles on our balance sheet are worth something. We think Centuria Bass is worth something. Centuria New Zealand is worth something. Brian West. Brian West is worth something. So it's easy to just, the word intangible has a connotation about it that could be negative, whereas we're proud of those businesses and we think they're highly valued and in some Well, a lot of cases were far more than we paid for them. But, you know, look, we get the question, Tom. We understand it. Respect it.

Okay, thanks. And then just on reset data, just going back to that, I mean, has any leasing actually occurred to date and what is the revenue from that leasing on a per annum basis?

Yeah, look, we have leased part of the facility. I'm not going to go into numbers, but at least a chunk of the facility, we have got strong demand over the rest of the current capacity as well. So we do expect that to lease up over the shorter term, as Simon talked about. So, yeah, OK, probably the big thing that... We've realised it is a longer decision process, a longer sales cycle to get both enterprise and government committed. There's definitely been increased demand over the last four or five months and we have got, as I said, a very strong pipeline. So we've done a chunk of it and demand over the rest of it, good pipeline over the rest.

And is there a point at which we can think of this business as breakeven? I don't know if it's 40% of the capacity or some number that, you know, as a guide will get the business to be breakeven.

Yeah, look, it obviously depends on terms and it depends on a lot of things, you know. The rearviews can fluctuate depending on the terms of the customer commitment on term, so it's a hard one to actually give you a number on that.

Tom, I think if we just looked at the Melbourne facility and looked at just leasing that up, the GPU capacity, and looked at our capital and looked at our return on capital there, I think that can come as profit quite easily. Richard Dart is a very young startup business and it will require further expenditure as time goes on to grow it. And that's no different than Centuribas, no different than Augusta, no different than all the other businesses we've built. You know, we do think it... We're just trying to be measured about making predictions about when that point happens, but we're certain it will occur

And we do think it's a huge opportunity in the space we're in and being an NVIDIA Cloud partner in Australia. But, yeah, it will take time to play out. But, yeah, we are excited about it.

Thanks very much, guys. Thanks, Tom.

Thank you. Your next question comes from the line of James Drews from CLSA. Please go ahead.

Yeah, hi, John. Hi, Jason. Apologies, another question on reset data. I'm just curious, from an industry perspective, single-phase directed cooling technology seems to be preferred over immersion cooling, even as we move down the track from Ruben to Feynman chips. It just seems to be easier to handle with equipment when it's not in liquid. How do you think about these two technologies? Why would a customer necessarily prefer immersion or is it more about just getting access to some compute?

Look, I think it is about access. We've got something built there ready to go. It doesn't necessarily affect the customer at all. You know, they're after compute and those high-performance chips. So as you've seen what NVIDIA and others are doing and where they're going and the... and what's happening in the chip space and the densities, it is going to go to a sort of combined unit of direct-to-chip as the next stage. But liquid immersion works very well as well. So for our existing facility that we've now built, I think it's very fit for purpose. It suits customers, and we've got a wide range of customers looking at it, all the way from large enterprise to government. So they seem very comfortable with it. Future facilities, assuming we build out further, Reset Data facilities may go towards more the new version of directed chip.

Reset guys are very close to NVIDIA.

I think we'll follow what technology they spare here. All the facilities we build are built on the NVIDIA architecture. So they have to be happy with it and we use their design protocols.

Well, the interesting part is... you know, the sovereign nature of their three NeoCloud partners, NVIDIA partners in the country, we're one of them, and we're the only one that's purely sovereign. And I think particularly when you're talking to state and federal government and universities, for example, that sovereign initiative or capability or mandate is becoming more and more important. So that's another thing that we're really looking forward to unfolding where we have a competitive advantage, but very early days.

Yeah, nahi on the sovereign AI. Just a follow-up, just remind me how the chip finance works. Are you on the hook if you don't have a tenant? What are the terms there?

Yeah, it really is a P&I. asset finance lend that we have at the moment on 818 in particular. So it's a P&I and if you have a tenant, you're generating revenue. If you don't, you still have the cost.

Yeah, okay, that's clear. And then just on the 0.8 bill of acquisitions in the depot on today, can we just get a, you might have provided this on the call, I'm sorry if I've missed it, but can you just provide some colour on what sectors they're in and or where the momentum's coming from?

Yeah, look, I think I said earlier, it's a mix of geographies being Australia and New Zealand and sectors, and it's got to be everything. So we've got industrial, we've got data center, we've got retail, and we've got office. So it is a nice range of asset classes and all opportunities that we think will be well received by our investors, both in New Zealand and Australia. Yeah.

Yeah, okay, that's clear. And one more, if I may, just on the performance fees coming through, just a bit of colour on the funds, where they're coming from, please.

A lot of what's coming through this year is coming through from West assets. Mainly retail and industrial. Mainly retail and industrial, yeah. That would be the two main ones.

Yeah, okay. Thank you. Thank you. Your next question comes from the line of Richard Jones from JP Morgan. Please go ahead.

Oh, good morning. Just wondering if you can discuss the Arrow Funds Management Acquisition, just maybe perhaps how they come about and I guess how you think about organic growth versus, you know, bolt-ons?

Sure, I'm happy to. On your first question, look, Arrow... We've been talking to them for a number of years. I think primarily we've been talking to them before we merged that business in. Sort of came to a head last year where we worked with the owners of that business. While we liked it, our ag strategy is quite focused. What it does allow, we like their portfolio of 26 assets and it got us some very strong tenant relationships. in some other sub-sectors in ag that we like such as poultry. I think Bayard is about half their tenant exposure, a very strong company and there are a few other sub-sectors in there as well. So I think it gave us a bit more diversification into ag but into ag sub-sectors that we like. On the investor base there's just under 500 investors. Another thing we liked was the makeup of those investors. A lot of high net worth and a lot of family offices. It's sort of been owned out of Melbourne and a lot of the investors were substantial individuals and family offices out of Victoria which would strengthen our investor base down in that state. So I think we got a number of benefits out of it. Obviously the financials stacked up too with synergies. We've picked it up for about $5.50 multiple which I think screens pretty well and it's something that we think we can grow and as we said in the presentation, we're already talking to some of the larger groups about investing into other products. Obviously CAP we've built organically which is the other large ag vehicle. As you stick a part of the question, organic versus non-organic, look, obviously we like to grow organically and with 800 mil of acquisitions in the pipe, that part of the business is going strong. In organic growth, we like buying platforms that really add value to us, be it a new sector that we like that we can scale up. Also, we like obviously things that are very accretive. as well but this sort of did help us scale up that ag vertical and get us through that billion dollar mark, well through the billion dollar mark and get us into those other sub-sectors.

Okay and then just a second question. Thanks Jason. Just a second question just on, sorry this is half an hour, the reset data. What is the likely capital deployment that business needs over the next two years and Can you discuss the options from a funding perspective that you guys are thinking about?

Look, it really depends where you take it. As John said, we're being very measured. We think it's a huge opportunity. You're seeing what others are doing, some of our peers are doing at the moment, and some are scaling up pretty quickly. We've chosen really to as I said, take a measured approach, work out how it plays out in this sort of sub-sector of AI and data centres. The relationship with NVIDIA is definitely a huge asset. We are very close to them. And I think it helps the other play, which is our real estate ownership of data centres as well, and does give us some optionality there. So I think it's something that we don't necessarily have to commit a lot of capital to, unless we want to, unless it makes sense. But at this stage, we're just doing the sort of measured approach and scaling up in that sort of fashion.

Yeah, I think to add to what Jason said, I completely agree. It's good. It's nice to make it clear, Richard. Look, you know, we started buying data centres in 2020, my career. Jason, we've got the Telstra one for $400 million. Back at that time, no one heard the word data centre, right? and we've been adding to that. There's just over $500 million of just real estate investments with data center operators as tenants, or Telstra or someone with Wango. That's fine. But as Jason said, that gives us... So we're going to have an involvement in data centers, whatever happens. Reset data came along, and that just gave us an opportunity just to be at the leading edge. And I think some of the important things about reset data are the video relationships, If we can build out where I think we're different to other people and you balance your question, the answer to it is probably this. We want customers to be locked in before we go out and secure some sort of debt as Simon described before. It's unlikely that we're going to try and attempt to raise a lot of debt and then hope customers arrive. So a little bit of build-up as they come. We're actually the only ones that have built it, to be fair, so far, outside government. But less hope, more measure, more locking in clients. Once that happens, I think we can find outside sources to fund progress as we make it. Thank you, George. Just one more quick question. Yep, sorry.

No, you can keep going. I don't want to cut you off.

No, just we don't want anyone to be surprised. You know, this space is dominated by flash releases, quick, you know, we just don't want any of that. This is slow. I hope it's not too slow, but measured and deliberate and based on customer demand. And it's exciting because there's a big pipeline. but we want that pipeline to be cemented and then we want to come back and tell you we've done it.

Thanks John. Just a quick one for Simon. Just the second half cost of debt, just can you tell us where you think that heads and any capacity for further margin reduction on balance sheet?

So obviously this first half had the list of those being repaid. The weighted average cost came down about 60 bps from last full year and it would probably come down another 60 odd bps in terms of the full second half. Sorry, what was the second part of your question?

So that would be 7% for the second half is what you're saying? And the other question was any further capacity for margin reduction on the rest of the book, whether you could bring any of that forward?

No, we've got to a point that we've refinanced all of our corporate notes out. So at the corporate level, I think at 2.75 or 275 bps is about where we're going to land for the moment. Some of the shorter term debt may roll off, it might come in slightly, but that's where we're kind of sitting on the margin side.

Thank you. Thank you. Your next question comes from the line of Ben Brasho from Baron Joey. Please go ahead. Good morning, guys.

Thanks for your time. You previously flagged the potential for the IPO of a couple of listed entities. I'm just wondering if you could provide an update on that. Is that something you're still considering?

Yeah, look, we are. It's subject to, obviously, market conditions. Obviously, you know, the market's a little overshot at the moment, so that window isn't there. We have done a lot of preparation, so if that window does open, we're ready to go on certain vehicles. But yeah, it's totally at the mercy of the market at the moment and look, we don't need those particular vehicles to be launched over the next four months to hit our guidance either.

And just a question on the financials, I was wondering if there's been any development operating earnings recognised from the inventory on the balance sheet for this period? And if so, if you could just quantify those roughly, please.

There's no profit coming through from that activity. I'm just trying to remember what was in my list of inventory. Yeah, so most of... Most of what was in inventory were properties held for sale as opposed to development properties. So it's just more of a classification thing under accounting standards as to why they're called inventory. So not a lot of profit coming through or zero profit coming through for many developments on balance sheet.

Okay, thanks Simon.

Thank you. Your next question comes from the line of Simon Chan from Morgan Stanley. Please go ahead.

Hey, guys. Hey, performance fee's pretty good, and you've reiterated 20 mil for the year. Just the way I'm thinking about it, you started booking performance fees. That suggests to me that there are probably some funds or some AUM that's coming towards the end of their set periods, right? Am I right? And if I am right, like, how big is that chunk? How much of your unlisted platform have funds coming to the end of their lives over the next 18 months?

The majority still is in 28-29 which has been there since we purchased Prime West and a lot of what is the unbooked performance fees relates to that particular period of time. These are just some other funds that are inside. that two-year window that have come into that two-year window. Some of that will be because the funds are expiring, some of it will be because there's opportunities with investors to do different things with that particular asset that create that outcome or something likely to happen within the next year. In addition, in many cases as has been the case the last couple of years, investors choosing to extend those funds as well even though they come into that two-year window. It's a mix of things that are going on, but in essence, there's a number of funds, as we said earlier, around industrial and retail that are coming into that two-year window.

How big is that bucket, Simon?

Well, the latent performance fees that are in there, it's about $70 million, isn't it?

I'm not talking about the fee, but I'm talking about the funds bucket that you were referring to.

A few hundred million.

Yeah. Sorry, Jase, did you say a few hundred? Yeah, a few hundred million, roughly. Okay, okay. Fair enough. And that excludes the Prime West, right, Simon?

No, that would include the Prime West assets. Okay. Most of what's been booked through this period is off the Prime West assets.

A big chunk of the Prime West assets got extended out to 29 upon their listing but it was also a part that didn't. So they did expire earlier.

Okay, cool. How's fundraising at Two Worlds going?

It's good. So that vehicle's got a large cornerstone investor. We expect them to take a significant chunk of the equity required for that purchase which is positive as well as new investors coming into the fund.

Over the last 12 months you've done Logan, you're doing Two Wells and you've done Port Adelaide. Which of those three sectors was the easiest to get money?

The Port Adelaide raise is probably the best I've ever seen. to raise sort of circa $300 million for a $116 million raise which we thought was reasonably large at that time for an Adelaide asset. We got bowled over. Everyone got scaled back over 50%. We also said no to a number of offshore institutions that wanted minority states as well. So yeah, that was definitely the most amount I've seen. Ligon went well as well. That was oversubscribed. I think we've got a pretty good demand across the book, particularly retail and industrial. Ag is good but that one cornerstone is a big chunk of demand into that fund which they keep supporting which is great.

Great, just one last one. Can I check in on Allendale? Are you guys still holding onto some units there or have you managed to get it away now?

We do have a holding, it's been coming down over time but there is a holding at this stage. How big is it?

That's alright mate, you can get back to me later.

We'll come back to you. Yeah, yeah, of course. That's fine. Thanks, guys. Thanks. Thanks, Alan.

Thank you. Your next question comes from the line of Andy McFarlane from Bell Porter. Please go ahead.

Oh, hi, guys. Just a couple from me. Can you just talk about the level of redemptions, if any, across the various funds at the moment?

Yeah, look, we only have the three funds that are redemptions. which are the open-ended funds. So CDPF, which are diversified funds, it's a small fund, our healthcare fund and our ag fund. We have quarterly redemption features. Now both the healthcare fund and CDPF came up with their five-year liquidity events where we go out to investors and... We go out to investors and give them the opportunity to let us know if they do want to redeem out the fund. We then have a period of time to raise more equity, sell assets and so forth to satisfy that. CHPF, I think we reported last results, we were at over 30% of investors put their hand up there and we're just going through the process of satisfying those. The latest was CDPF, Diversified Fund. Again, around 30%-odd put their hand up for redemptions. We've already satisfied about 25% of them and the rest will be sorted out pretty quickly with some assets that are going through the sale process at the moment. It's not a lot. It's sort of less than 120-odd mil across the board.

Thanks, Jason. Just in the pack, you've got a chart on bank hybrids rolling off. Some of your peers looking at doing things as product replacements. Anything either Bass or Centuria could play a role in finding products here, if so?

Look, we think, you know, these investors are looking for yield. Our products can yield. supply that across either the credit or equity side of things. So we think it will be a tailwind for us and obviously other managers as well. As I said earlier, we have been pretty surprised on some of our raises, the amount of demand out there. As these hybrids roll off year on year over time, I think that will help support demand for our sorts of products. Yeah, as long as we can keep up an attractive yield and a buffer over, you know, term deposit rates, which it's looking like we can do on both sides of the Tasman, our product should be pretty well received.

So, lastly for me, the LVR just says it's creeping up a little bit in the debt book. Just wondering kind of where you're happy with that sitting.

In the funds?

Yeah. Yeah, look...

Look, our funds, I don't think it's moved too much. We sort of sit normally around that, you know, for a new fund in that 45% to 50% range.

Oh, sorry, I meant Centurio Bass, apologies.

Oh, Centurio Bass. Oh, look, it's a couple of percent on LVRs. But look, we put that graph in there to show it hasn't moved that much. It's been pretty stable. We've stuck to about, I think, just over that 92% first mortgage. It's about 90% residential. Look, where the LVR is, around where it is now is where we're comfortable. Each deal is obviously diligence on its merits, on the counterparty, on the quality of the asset, but how we look at it is it's an asset lens. and what is the value of what we're lending against, and having the teams in-house that can really have a close look at it, a large development team, a large VALS team. I think it really gives us a bit of a point of difference compared to most of the other managers out there.

Thanks, guys.

Thank you. Once again, if you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. There are no further questions at this time. I will now hand back to Mr. Bain for closing remarks.

I'd like to thank everyone for attending this morning and for the questions. We enjoyed it. And I'll send out thanks to Tim and Peter in particular for helping put a really nice adoption together. Thank you.

Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.